Eleven mistakes on your tax re

Eleven mistakes on your tax return that could land you in jail

A new set of law amendments has given SARS the power to imprison citizens should they not comply.

Eleven mistakes on your tax re

New reports reveal that failure to register your details with the South African Revenue Service (SARS) or not notifying it of changes to your details, could result in up to two years’ imprisonment.

Yes, it is said that a new set of law amendments, signed by President Cyril Ramaphosa and promulgated on 20 January, has granted SARS the legal firepower it needs to impose criminal sanctions on taxpayers who neglect their tax affairs.

‘Willfully and without just cause’

TimesLive reports that before the promulgation of the Tax Administration Laws Amendment Act 2020 (Amendment Act), a mistake made by a taxpayer was only a crime when it was committed “wilfully and without just cause”.

In other words, the law required an element of intent; where negligence or ignorance caused your administrative non-compliance, you would have gotten off with a slap on the wrist.

Now, this does no longer matter — whether you “negligently” fail to comply or make certain mistakes on your taxes, you commit an “imprisonable criminal offence”.

Eleven mistakes on your SARS Tax return that could land you in jail

The mistakes that can land you in jail for up to two years include:

  • Failure to register your details with SARS or to notify it of any changes to your details;
  • Failure to appoint a representative taxpayer or to notify SARS of such appointment or a change in representative taxpayer;
  • You receive compensation for assisting someone with their taxes and you fail to register with SARS as a tax practitioner;
  • Failure to submit a return when required to do so;
  • Failure to retain all relevant substantiating records; 
  • Failure to provide any information as and when requested by SARS to do so;
  • Failure to appear and comply when you are requested by SARS to attend a meeting or a hearing to give evidence;
  • You are issued with a directive or instruction by SARS and you fail to comply with it;
  • You fail to disclose any material information to SARS or you fail to provide SARS with any notification as required under any tax act;
  • You are notified by SARS to pay an amount on another taxpayer’s behalf in settlement of a tax debt and you fail to do so; or
  • You have a withholding obligation and you fail to withhold or deduct the tax correctly and pay it over to SARS.

Lifestyle audits

Apart from these new amendments, several South Africans will be subjected to lifestyle audits by SARS as it implements measures to recover shortfalls in tax collections.

On Monday 11 January, Judge Dennis Davis, who heads up the Tax Review Committee, spoke about measures the tax collecting authority would implement to address this issue.

Davis told Bruce Whitfield on 702’s Money Show that lifestyle audits of the country’s wealthy would be used as a means to collect the under-recovery in taxes the government faced every year. He referred to lifestyle audits as “low-hanging fruits” — simple and effective ways for SARS to force tax dodgers to pay up.

Davis believes numerous South Africans do not accurately disclose their net worth in order to avoid high tax submissions to SARS. He said the actual number of South Africans reflecting taxable incomes of more than R5-million a year was unrealistic.   

“There are only about 5,000 to 6,000 people who reflect taxable income of more than R5m… Drive around Clifton, Camps Bay, Bishopscourt, Bryanston, Sandton… How many people have to have that level of income for the upkeep?

There are a lot of rich people around who aren’t disclosing,” Davis said in the interview. Davis also said the values of luxury vehicles were not being disclosed by certain individuals.

“If you have a R3m Ferrari and are reporting R100 000 in taxable income, I think the revenue authority is entitled to knock on your door and ask you to explain,” he said.

He believes individuals with luxury vehicles and those who own homes in the country’s premium suburbs should be subjected to lifestyle audits as a means to encourage compliance and rectify under-collection of tax revenue.

“That is apart from all of the luxury motor cars you see on our roads. So, if you take R5m [as the top bracket], there are a lot of rich people who probably have a lot more than that and are not disclosing it,” Davis said.